Submarines Down Under
Aussie Bidding War Heats Up

Submarines have become a particularly hot item as Asian powers look to bulk up in the face of Chinese expansionism. China has been building its own sophisticated submarines in recent years, and Beijing commissioned anti-submarine warships in 2014. Australia, too, has been preparing to modernize its fleet, and it is in the final stages of deciding which country would get its lucrative contracts. The WSJ:

Australia’s government is expected this year to choose a new diesel-powered attack submarine to replace six aging vessels, and it is weighing Japanese, German and French bids for the $50 billion Australian dollar (US$38 billion) job. As a decision looms, the lobbying is growing more intense, with the companies behind the bids pledging to do the work in Australia and transfer technology.

Shunichi Miyanaga, chief executive of Mitsubishi Heavy Industries Ltd., which is leading the Japanese bid, said in an interview this week that the company is prepared to build the submarines in Australia rather than Japan, and to share software and advanced welding methods with Australia.

He added that Mitsubishi Heavy, a core member of Japan’s Mitsubishi industrial group, could sweeten the bid by acting as a “mediator” for Japanese investment in Australia.

“If we are successful, we are ready to work together with the Australian people to realize their target not only to have the most advanced conventional submarines but also to have the most Australian fabrication work and technological transfer,” Mr. Miyanaga said.

Meanwhile, a French delegation was also in Australia this week, pitching its services just as hard:

The French visit, which includes top officials from France’s state-controlled naval contractor DCNS, is part of a process of growing strategic and economic ties with Australia, said French Ambassador Christophe Lecourtier, and not limited to submarines.

“We’re not just offering a submarine design, but also a broader alliance between our business communities, between our governments, to face some of the most tricky challenges of this century,” he told Reuters.

The Japanese offer was the clear favorite before Prime Minister Malcolm Turnbull replaced Tony Abbott. Abbott, who got along well with Japanese Prime Minister Shinzo Abe, was considering overruling Australia’s labor unions (which opposed the Japanese bid) for geostrategic reasons (the United States was pushing quietly behind the scenes for Australia to green-light the Japanese tender). With Turnbull taking the helm last fall, Mitsubishi began to make concessions, promising to build the submarines on Australian soil with Australian workers. These latest additional sweeteners show just how keen Japan is on sealing the deal.

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